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Portolano: Artificial Intelligence can Support Risk Analysis of Contracts and Definition of Mitigating Actions

In the current COVID-19 context (“coronavirus,” for simplicity), companies should map their contractual rights and obligations to determine whether risks exist and, if so, what mitigation actions could be put in place. This risk analysis can be made in a very short time (that is, a few hours or even less than an hour) with the support of artificial intelligence.

We have adopted an artificial intelligence platform in 2017 and, to support companies in this emergency situation, we will contribute by sharing our experience in the platform and the type of analysis required.

The ability to map contractual risks in an efficient manner through use of artificial intelligence would enable a company to proactively identify risks, as opposed to reactively, and to identify mitigating actions ahead of the problems arising.

Companies Should Map Risks for Buy-Side as Well as Sell-Side Contracts

To identify risks, a company should look at contracts where the company is on the buy side (that is, its supply-chain, other providers, etc.) as well as to those contracts where the company is on the sell side (that is, contracts with clients). At the same time it may be the company, or the other party, or both parties to be impacted by coronavirus. In other words, every contract should fall in one of the boxes below.

For example, company ALFA is an Italian engineering company required under one of its contracts to send engineers to another country (where there is no coronavirus impact). This is a sell-side contract for ALFA, where ALFA is impacted by coronavirus. If we were to map this in a chart, the issue would fall (from ALFA’s standpoint) in the red box below.

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AUTHORS:
Yan Pecoraro, Partner
Francesco Portolano, Partner

Compliments of Portolano Cavallo Studio Legale – a member of the EACCNY.